Bitcoin is a virtual currency. But what is bitcoin and why is it a virtual currency?
Bitcoin is essentially a digital currency that can be exchanged electronically. Bitcoins do not exist as a physical object.
It is created and tracked by a network of computers using complex mathematical formulas, rather than by one body or organization.
It is virtual, but not "real" currency. Why?
Nobody is behind Bitcoin.
Bitcoin is not issued by a central government agency. For example, if you have a 10 euro banknote, the central bank guarantees you the right to pay with that currency anywhere in the euro area.
However, no one guarantees your right to use bitcoins and does not seek to maintain the stability of their value.
Bitcoin is not a generally accepted form of payment.
If Bitcoin were a currency, you could use it in many places. But in fact, there are very few places where you can pay with bitcoins. And where possible, transactions are slow and expensive.
Although in 2020 it was accepted as a form of payment by the Pay Pal system, which partly influenced the growth of the bitcoin rate from the summer of 2020. Which made it easier and cheaper for transactions, but at the same time traceable.
Users are not protected.
Hackers can steal bitcoins. If this happens, you have no legal remedy.
Bitcoin is too volatile.
Currency should be a reliable store of value so that you can be sure that you can buy about the same number of things with your money today as you would tomorrow or around the same time next year. Bitcoin is unstable. It happens that in a few days its value both rises and falls sharply.
But if Bitcoin is not a currency, then what is it?
Bitcoin is speculative in nature. In other words, Bitcoin is something that you can bet on for profit, but at the risk of losing your investment.
Is the Central Bank going to ban bitcoin?
It is not the responsibility of the Central Bank to ban bitcoins or other so-called cryptocurrencies. However, given the lack of consumer protection, it is important to exercise caution.